Trustees breached duties with £600,000 settlement to ex-principal, regulator finds

20 Jul 2020 News

Trustees at the University of Aberdeen breached their duties by making substantial settlement payments to the former principal, an inquiry has found.

The Scottish Charity Regulator (OSCR) has published the findings of its inquiry into the University of Aberdeen and found misconduct in the administration of the University. 

The university's accounts disclosed a total of £601,000 paid to the former principal in settlement of his retirement. In addition, a payment of £50,000 plus VAT was made on his behalf by the University for outplacement support to assist him with finding new employment, and this was not disclosed in the accounts.

In January 2019 the Scottish Funding Council (SFC) wrote to the university seeking clarification of the issues surrounding the payments and, following review of the university’s response, decided to undertake a formal review and to share its concerns with OSCR.

The regulator opened an inquiry into the university on 10 July 2019. The inquiry looked at whether in reaching and making the settlement payments, the charity trustees met their duty to act in the interests of the university.

Breached funding terms  

The regulator found that the charity trustees breached the terms under which the university received funding from the SFC, resulting in a liability to return a portion of the funds.

They also breached the university’s financial regulations in failing to obtain guidance from the SFC before making a severance payment, and were unable to provide evidence that the settlement decision reached by the remuneration committee was fully reported to and considered by the University Court as required.

The inquiry did find evidence that the charity trustees were faced with an urgent need to address a potentially difficult situation in the academic leadership of the university in the summer of 2017. 

In July 2017 the principal intimated his intention to retire from post. 

“We heard varying accounts of the events that led to this decision but, in summary, the evidence indicates that difficult issues had developed in the professional relationships within the academic leadership team at the university,” the report states.

This left them facing a need to address the situation urgently to resolve these issues. The principal’s decision to retire initiated a period of negotiation of the terms of his settlement.

Nevertheless, the level of care and diligence that was exercised by the charity trustees in reaching a settlement with the principal “fell below the required standard in a number of respects”.

Outcome

The majority of the charity trustees on the remuneration committee at the time of the events in question are no longer trustees of the university and are not trustees of any other charity. 

The SFC published its report and made recommendations to the university in February 2020. As a result of breaching the financial memorandum with the SFC, the university was required to pay back a grant of £119,000. 

Civil Society Media’s 13th annual Trustee Exchange conference will be run virtually over two mornings on the 29th and 30th July. Pressure on trustee boards has never been higher and we are keen to respond to that need for greater help and guidance in a safe and timely manner – hence the move to an online conference. Find out more here.

 

 

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